Topic 1: Operations

Name the operations strategy, then tie it to the business in front of you: its products, its customers and the performance objective it serves.

A lesson for this topic

Quick checks: multiple choice

Question 1

Which statement best describes cost leadership as a strategic role of operations?

Question 2

Highfield Furniture in Ballarat builds solid timber tables to each customer's measurements and offers a ten-year guarantee. Its prices are well above those of flat-pack rivals. Which strategic role of operations does Highfield follow?

Question 3

Which feature most clearly separates a service from a good in operations?

Question 4

Wattle Bay Juices plans a national television campaign that its marketing team expects will double summer orders. Which action best shows the interdependence of operations with marketing?

Question 5

The operations manager of a Geelong bakery wants to buy a new oven costing 250 000 dollars. Which function must operations work with to decide how the oven will be paid for?

Question 6

Which of these businesses has operations whose main output is a service?

Question 7

Sunpath Solar sells standard rooftop panels that are almost identical to rivals' panels, and its customers choose mainly on price. Which operations decision best supports Sunpath's strategic role?

Question 8

What is operations management?

Question 9

Tamar Valley Knitwear now competes with jumpers made at lower cost in several countries, and it has begun buying its wool from overseas suppliers. Which influence on operations does this show?

Question 10

Customers of an online shoe retailer now expect free returns and delivery within two days as a normal standard of service. Which influence on the retailer's operations is this?

Question 11

A Brisbane furniture maker finds that rivals now sell very similar chairs at prices 20% below its own. Which influence is this, and which operations response fits it?

Question 12

Which action is an example of ethical responsibility, rather than legal compliance, in operations?

Question 13

The government offers a tax incentive to manufacturers that invest in energy-efficient equipment. Which influence on operations does the incentive show?

Question 14

A food processor in Mildura must now print allergen warnings on every label under a new food standard, or face penalties. Which influence on operations does this show?

Question 15

A Fremantle printing business finds that new digital presses let rivals print small jobs cheaply and within hours. Which influence on its operations is this?

Question 16

Which operations change is a response to the influence of environmental sustainability?

Question 17

Why might a business choose to go beyond legal compliance in its operations?

Question 18

Which is a likely effect of globalisation on the operations of an Australian clothing manufacturer?

Question 19

Which of these is a transformed resource in a hospital's operations?

Question 20

In a bakery, which input is a transforming resource?

Question 21

Bay Print Co prints a few unique wedding invitations each week, each designed with the couple. Compared with a factory that prints millions of identical cereal boxes, Bay Print's operations have:

Question 22

Which business's operations have the highest visibility to its customers?

Question 23

A ski hire shop in Jindabyne is busy all winter and almost idle in summer. Which characteristic of its transformation process does this describe?

Question 24

Gantt chart for a cafe fit-out as a table
Task	Starts at end of week	Duration (weeks)
A Strip out	0	3
B Electrical work	3	2
C Kitchen build	3	4
D Painting	7	1

The table shows a Gantt chart for fitting out a new cafe in Bendigo. Tasks B and C both start when task A ends, and task D starts when task C ends. When will the fit-out be finished?

Question 25

Activities for installing a new production line
Activity	Duration (days)	Must follow
A	4	none
B	6	none
C	3	A
D	5	B
E	2	C and D

Kurrajong Metalworks in Orange is installing a new production line. The table shows each activity. Which activities are on the critical path?

Question 26

Activities for installing a new production line
Activity	Duration (days)	Must follow
A	4	none
B	6	none
C	3	A
D	5	B
E	2	C and D

Using the same activities for Kurrajong Metalworks' new production line, how many days can activity C be delayed without delaying the whole project?

Question 27

A car repair workshop keeps all its welding equipment in one area and all its spray painting equipment in another, and each job moves between the areas as it needs them. Which layout is this?

Question 28

What is task design in operations?

Question 29

A tile factory in Wollongong measures the percentage of tiles that crack in the kiln each week and compares it with a target of 2%. Which part of the transformation process is this?

Question 30

A Launceston factory made 12 500 bicycle helmets in March, and 375 of them failed inspection. What percentage of the helmets made failed inspection?

Question 31

What is the main purpose of a warranty as part of a business's outputs?

Question 32

Sales at a Toowoomba bike shop have fallen since online reviews began to complain about slow repairs and emails that are never answered. Which part of its operations most needs attention?

Question 33

A courier's business customers say they do not mind whether a parcel takes two or three days, but it must arrive on the day the courier promised. Which performance objective matters most to these customers?

Question 34

Which statement describes flexibility as a performance objective?

Question 35

Under just-in-time inventory management, a business:

Question 36

A Cairns surf shop began the month with 200 wetsuits that cost 15 dollars each to buy in, then bought 300 more at 18 dollars each. It sold 250 wetsuits during the month. Using FIFO, what is the cost of the wetsuits sold?

Question 37

When the prices a business pays for stock are rising, how does valuing stock with LIFO rather than FIFO change its reported results?

Question 38

Kestrel Drones in Adelaide designs drones but pays a specialist company in Malaysia to assemble them. What is the main advantage of this outsourcing for Kestrel?

Question 39

Compared with established technology, what is the main risk of adopting leading edge technology in operations?

Question 40

Which statement best describes quality assurance?

Question 41

Staff at a Hobart cannery meet each week in small teams to suggest ways to cut waste and errors, and managers act on their ideas. Which quality management approach is this?

Question 42

A Shepparton cannery will install robots that replace 30 jobs on its packing line. Which cost of overcoming resistance to change is linked most directly to the staff who leave?

Question 43

In operations, what does inertia mean as a source of resistance to change?

Question 44

Which change is an example of supply chain management that uses e-commerce?

Question 45

Which is an example of scanning and learning as a global factor in operations?

Question 46

A Canberra gym redesigns its membership so members can book classes on an app and pause their membership online. Which operations strategy is this?

Question 47

A Ballarat brewery has fixed costs of 60 000 dollars a month and a variable cost of 2 dollars a bottle. By how much does its average cost per bottle fall when monthly output rises from 20 000 to 40 000 bottles?

Written questions: Sections II, III and IV

Ridgeline Caravans and its production scheduleSection II style · 7 marks

Ridgeline Caravans Pty Ltd builds made-to-order caravans in Albury. Customers have complained that caravans are often delivered later than promised. The production manager has listed the activities needed to build one caravan.

Activities to build one caravan
Activity	Duration (days)	Must follow
A Build chassis	3	none
B Build body	4	A
C Install wiring	2	B
D Order and receive appliances	5	none
E Fit-out	3	C and D

(a) Calculate the minimum number of days needed to build one caravan. [2]

days

(b) Calculate how many days activity D can be delayed without delaying the caravan. [1]

days

0 words · about 80 to 120 words

Brightwater Dairy and its influencesSection II style · 8 marks

Brightwater Dairy Pty Ltd makes cheese and yoghurt in Gippsland. It now competes with cheaper imported cheese, and the supermarkets it supplies ask for less packaging. New rules require it to treat waste water before release. Its board is considering a biogas plant, costing 1.2 million dollars, that would turn dairy waste into energy and save about 150 000 dollars a year. No law requires the plant.

(a) Identify TWO of the influences on Brightwater's operations that the case describes. [2]

0 words · a sentence or two

(b) Explain one advantage and one disadvantage for Brightwater of building the biogas plant, which goes beyond legal compliance. [6]

0 words · about 120 to 200 words

Mallee Garden Supplies and its stockSection II style · 10 marks

Mallee Garden Supplies in Mildura sells irrigation pumps to farmers. Its warehouse is full, and demand for pumps peaks in spring and summer. Its main supplier is in Melbourne, 550 kilometres away. The table shows its pump stock for October.

Pump stock for October
Item	Pumps	Cost per pump (dollars)
Opening stock	40	250
Bought in October	60	280
Sold in October	70	not given

(a) Using FIFO, calculate the cost of the pumps sold in October. [2]

dollars

(b) Outline how just-in-time inventory management works. [2]

0 words · a sentence or two

(c) Explain one advantage and one disadvantage for Mallee Garden Supplies of moving to just-in-time inventory management. [6]

0 words · about 120 to 200 words

Pinnacle Outdoor Wear and its strategic roleSection II style · 9 marks

Pinnacle Outdoor Wear Pty Ltd makes waterproof hiking jackets in Launceston. Its jackets sell for 450 dollars, about twice the price of imported jackets, and each comes with a lifetime repair service. Its marketing team plans to launch a new lightweight range next year.

(a) Outline the difference between cost leadership and good differentiation. [2]

0 words · a sentence or two

(b) Explain TWO ways Pinnacle's operations could support its differentiation strategy. [4]

0 words · about 80 to 120 words

0 words · about 50 to 80 words

Ironbark Brewing Co.: a report on operationsSection III business report · 20 marks

Ironbark Brewing Co. Pty Ltd brews craft beer in Ballarat and sells it to pubs and bottle shops across Victoria. Two larger rivals have cut their prices, and Ironbark's gross profit has fallen. Its brewhouse equipment is fifteen years old, and its 22 staff fill and label bottles by hand. Last year a batch of beer was recalled after some bottles were found to be contaminated. The owners have 600 000 dollars available to invest. The table gives figures for the last two years.

Ironbark Brewing Co.: selected figures
Measure	Two years ago	Last year
Sales (dollars)	3 200 000	3 000 000
Gross profit (dollars)	1 280 000	1 050 000
Batches failing inspection	2%	5%
Bottles filled per labour hour	400	380

(a) You are an operations consultant. Write a business report to the owners of Ironbark Brewing Co. that recommends operations strategies to improve its competitiveness. In your report, analyse the influences on Ironbark's operations and evaluate the strategies you recommend, including their effects on its finances and its staff. [20]

Write it as a business report: a heading on its own line for each section, ending with your recommendations.

0 words · about 800 words

Influences on operationsSection IV extended response · 20 marks

A medium-sized Australian manufacturer of kitchen appliances faces competition from imported appliances, rapid changes in production technology, and customers who want appliances with a lower environmental impact.

(a) Analyse the influence of globalisation, technology and environmental sustainability on the operations of a business such as this one. [20]

0 words · about 800 words